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Wednesday, March 19, 1997 - Page updated at 12:00 AM

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Karl Herrmann, Insurance Commissioner, State Senator

Seattle Times Staff Reporter

Karl Herrmann, who served as state insurance commissioner from 1969 to 1976, has died at age 81.

Mr. Herrmann, who was the first statewide candidate in Washington history to get 1 million votes, when he was re-elected in 1972, was defeated in his second re-election bid after he was accused of misusing his office for personal gain.

Mr. Herrmann prevailed on seven of the nine counts brought against him by then-Attorney General Slade Gorton in a civil suit, and settled the remaining two.

Mr. Herrmann, who resided in Olympia but did legal work in Seattle and Tacoma, died Monday of diabetes.

Born in Granite Falls, he grew up in Leavenworth, Chelan County. He managed a Sprouse-Reitz dime store there at age 21. After running several dime stores in Eastern Washington, he earned a law degree at Gonzaga University in 1948.

He practiced law until his election to the state Senate in 1956. He chaired the Senate Committee on Banks, Financial Institutions and Insurance, and after being elected insurance commissioner in 1968, he helped get national legislation to outlaw redlining in neighborhoods considered deteriorating by insurance and mortgage companies.

"As commissioner, he also developed the Washington Guarantee Fund," said his son Charles Herrmann of Gig Harbor, "which required all state insurance companies to jointly pay off any policyholders of insurance companies that went bankrupt."

Mr. Herrmann's office won many court challenges to this, including one before the U.S. Supreme Court.

After leaving public office, Mr. Herrmann continued in his legal career, last year helping San Francisco attorney Melvin Belli develop the international lawsuit against Korean Airlines, after KAL Flight 007 was shot down in 1983 after straying into Soviet airspace.

Other survivors include his wife of 37 years, Beatrice Herrmann of Olympia; children James Herrmann of Seattle, Karl Herrmann Jr., Spokane, and Gretchen Johnston, Seattle; sisters Kathryn Connelly, Spokane, and Elvira Kiehlbauch, Carson City, Nev.; and 11 grandchildren.

Services are at 2 p.m. Friday at Mountain View Funeral Home, 4100 Steilacoom Blvd. S.W., Tacoma.

Memorials may go to Benaroya Diabetes Center c/o Virginia Mason, P.O. Box 900, Seattle, WA, 98111.

Copyright (c) 1997 Seattle Times Company, All Rights Reserved.

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